Gordon Brown’s drive to recapture the political agenda with a programme of new laws to create “an opportunity-rich Britain” was badly shaken yesterday by King’s warning.

“The nice decade is behind us,” Mervyn King declared in funereal tones, warning that the economy was “travelling along a bumpy road” as he predicted rising prices would put a squeeze on take-home pay for millions of workers.

Britons should not expect another cut in interest rates for at least two years, the Bank of England indicated yesterday as it warned that inflation would rise far above its previous forecasts and persist at levels well above the government’s target until early 2010.